The Plan Collection Notes Interest Among Young Buyers Who Cannot Afford to Buy

Research indicates 25 to 34-year-olds experience largest homeownership decline from 2006 to 2011

According to a recent USA Today Census Bureau data analysis, between 2006 and 2011, young adults between the ages of 25 to 34 years felt the biggest decline in home ownership rates in the United States. The reason? Not surprising … unemployment, student loan debt and little inventory for affordable housing are preventing young people from being able to become home owners. And because of their debts, they are finding it difficult to qualify for a mortgage or come up with a down payment to buy a house, let alone build a new home. This means that this age group is continuing to either live with family or rent.

It is due to these financial burdens, along with high unemployment, bad credit, low inventory and a slower than expected economic climate that have experts noting the depleted confidence, keeping many young adults from entering the home buying or home building markets. In this same age group renters increased from 2006 to 2011 by more than a million, while the number who own a home declined by almost 1.4 million.

Despite these facts, what we are seeing at The Plan Collection includes a number of younger people who are interested in looking at house plans on the website at www.theplancollection.com collecting information and planning for future home building, but not necessarily buying house plans right away.

This age group is seeking a smaller starter home like this modern house plan (#149-1216). They seem to prefer homes with a unique and crafted open kitchen that is just off of a big great room, a smaller guest room – maybe 10 ft. by 12 ft. –a bigger master bedroom suite separated by a spacious bathroom.

Today’s youth-oriented trends also include open Feng Shui friendly designs and outdoor patios with a kitchen for casual entertaining of family and friends – probably because fewer couples with young families want to spend their money eating out. They prefer a home with less square footage, easier maintenance and less landscaping to keep up -- but rather an organic garden complete with fish ponds.

During the last year, housing sales (and prices) have been on the rise due to low interest rates, therefore people of all walks of life have been encouraged to try to buy a house. However research indicates that despite this fact, since 2006, 25 to 34-year-olds have actually experienced the largest decline in homeownership rates nationwide. U.S. homeownership rates have declined by 7 percentage points for this age group from 2006 to 2011. Rates went from 46.7 to 39.7 percent. By comparison, the national homeownership rate for all ages declined 2.7 percentage points, from 67.3 percent to 64.6 percent owning a house.

First time buyers are typically considered critical to the housing market because they stimulate both construction as well as retail spending, and without first time homebuyers, the aging Baby Boomers will find it more difficult to cash in on their homes prior to retirement.

The National Association of Home Builders (NAHB) annual member census showed that in 2011, a typical single-family builder started 23 housing units -- down 12 percent from 2010 and 53 percent since 2008.

The good news is that the housing market is finally experiencing an upswing today as sales for new and existing home sales have finally increased. New homes were up nearly 20 percent in 2012 from 2011, while existing home sales were up 9.4 percent, according to the National Association of Realtors (NAR.)

However for a generation of young folks with student loans who are dealing with high unemployment, home ownership looks bleak. Many experts believe that it is not just student loan debt, but also tighter lending standards and credit requirements that are keeping young people from buying a home. According to Freddie Mac, mortgage rates rose nearly a percentage point from a year ago. There is also a lack of inventory for the smaller and more affordable houses typically appealing to first-time buyers.

Sources: USA TODAY analysis of U.S. Census Bureau data from the American Community Survey; National Association of Realtors (NAR), Freddie Mac and the National Association of Home Builders (NAHB).